GEORGE P. SHULTZ, SECRETARY OF STATE, PETITIONER V. MARGUERITE COOPER KING, ET AL. No. 86-86 In the Supreme Court of the United States October Term, 1986 Petition for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit The Solicitor General, on behalf of the Secretary of State, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the District of Columbia Circuit in this case. PARTIES TO THE PROCEEDING In addition to the parties named in the caption, named respondents are Alison Palmer, A. Ellen Shippy, Mary Lee Garrison, Mary C. Finrow, Laurel M. Cooper, Mary Hartman, Mary A. Ryan and JulieAnn McGrath. These respondents represent a certified class composed of women who unsuccessfully applied between 1976 and 1983 to become Foreign Service Officers through the Department of State's Junior Officer Program, who were not subsequently hired as Foreign Service Officers, and who did not also apply to become Foreign Service Officers through mid-level, lateral entry, or reappointment programs. TABLE OF CONTENTS Parties to the Proceeding Opinions Below Jurisdiction Statute involved Questions Presented Statement Reasons for granting the petition Conclusion Appendix A Appendix B Appendix C Appendix D -- Appendix E Appendix F OPINIONS BELOW The order of the court of appeals (App., infra, 1a-2a), and the memorandum and order of the district court (App., infra, 3a-17a) are unreported. JURISDICTION The judgment of the court of appeals was entered on March 24, 1986. On June 16, 1986, the Chief Justice extended the time within which to file a petition for a writ of certiorari to and including July 22, 1986. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). STATUTE INVOLVED 42 U.S.C. 2000e-5(k) provides: In any action or proceeding under this subchapter the court, in its discretion, may allow the prevailing party, other than the (Equal Employment Opportunity) Commission or the United States, a reasonable attorney's fee as part of the costs, and the Commission and the United States shall be liable for costs the same as a private person. QUESTIONS PRESENTED 1. Whether Section 706(k) of the Civil Rights Act of 1964, 42 U.S.C. 2000e-5(k), waives the government's sovereign immunity to permit the calculation of an attorney's fee award against the United States on the basis of an attorney's current rates (rather than the "historic" rates charged at the time that the work at issue was performed) to compensate the attorney for delay in the receipt of payment. 2. Whether an attorney's fee awarded under Section 706(k) should be enhanced for the superior quality of the representation when the lodestar was calculated on the basis of the attorney's actual rates. 3. Whether an attorney's fee awarded under Section 706(k) should be enhanced because there was some risk that the case might have been lost, and that the attorney therefore would not have received a fee. STATEMENT 1. In 1976, respondents brought these consolidated actions against the Department of State under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq., alleging that the Department had discriminated on the basis of sex in the hiring and treatment of Foreign Service Officers. The merits of the actions were settled in part in October 1983, when the United States District Court for the District of Columbia approved a consent decree providing relief for female junior-level Foreign Service applicants. App., infra, 26a-27a. Respondents then sought attorneys' fees under the Title VII fees provision, 42 U.S.C. 2000e-5(k), which states that "the court, in its discretion, may allow the prevailing party * * * a reasonable attorney's fee as part of the costs, and * * * the United States shall be liable for costs the same as a private person." In making this request, respondents maintained that the fee should be calculated on the basis of their attorneys' current, rather than their "historic," rates (see App., infra, 34a). /1/ The government opposed this method of fee calculation, maintaining that the use of current rates was equivalent to an award of interest against the United States, which is improper in the absence of a waiver of sovereign immunity (ibid.). /2/ On September 17, 1984, the district court rejected the government's contention. Relying on Murray v. Weinberger, 741 F.2d 1423 (D.C. Cir. 1984), the court held that Section 2000e-5(k) "is a statutory waiver of sovereign immunity" (App., infra, 35a), in "the current rates context" (id. at 35a n.5). The court reasoned that private defendants may be required to compensate the attorneys for prevailing Title VII plaintiffs at current rates, and noted that the statute generally measures the government's liability against that of private defendants. The district court therefore concluded that a fee applicant "may calculate the lodestar according to current rates, or she may rely upon historical rates and seek an adjustment for 'delay in payment'" (ibid.). Here, the court based its fee award for respondents' attorneys on 1984 rates (id. at 34a-35a). In doing so, however, the court looked not to the attorneys' actual rates, but rather to a higher, hypothetical "prevailing community rate( )" (id. at 28a-36a). After calculating the lodestar, the district court found that the addition of a "contingency adjustment" would be appropriate to compensate respondents' attorneys for the "uncertainty of ever receiving compensation" (App., infra, 43a). The court noted the "legal and factual complexity and uncertainty (that) existed at the commencement of this suit," accepting respondents' submission that the "odds of success" at the outset were 75%. Given these considerations, the court concluded "that the merits lodestar should be adjusted upward by 20% to fairly compensate (respondents') counsel." Ibid. The court accordingly awarded respondents' attorneys a total of $439,541.48 in fees and costs (id. at 25a, 45a). 2. On October 15, 1984, the government moved the district court for reconsideration of the fee award, arguing that, under the intervening decision in Laffey v. Northwest Airlines, Inc., 746 F.2d 4 (D.C. Cir. 1984), cert. denied, No. 84-1655 (June 17, 1985), the use of prevailing community rates in calculation of the lodestar was inappropriate. In response to this motion, the district court essentially broke the fee award into three parts. The first part included the largely undisputed portion of the fee award (based on the actual historic rates of respondents' attorneys); on November 7, 1984, the court issued an interim award ordering the government to pay this portion of the fee -- $219,439.40 -- within 14 days. (App., infra, 22a-23a. The second portion of the award involved "the difference between the uncontested amount (based on the historical hourly rates of (respondents') counsel when the work was performed) and the amount of fees as calculated based on the use of hourly rates in effect when the Fee Application was filed" (id. at 21a); in a separate order, the court also directed the government to pay this amount -- $38,222.81 -- within two weeks. Finally, the district court reserved judgment on the third portion of the award, which represented the difference between a fee based on actual rates and a fee based on hypothetical community rates. On the government's appeal of the interim fee awards, the court of appeals summarily affirmed the second interim order, which mandated payment of the undisputed portion of the fees at current rates (App., infra, 1a-2a). /3/ The court of appeals explained only that "the correctness of the district court judgments" is "demonstrate(d)" by the District of Columbia Circuit's decision in Shaw v. Library of Congress, 747 F.2d 1469 (1984), rev'd, No. 85-54 (July 1, 1986), which held that Section 2000e-5(k) waived the sovereign immunity of the United States as to awards of interest (App., infra, 19a). The government then filed a petition for a writ of certiorari (No. 85-50) challenging this judgment; on July 7, 1986, this Court vacated the judgment of the court of appeals and remanded the case for reconsideration in light of the Court's decision in Shaw. 3. While the challenge to the second interim fee award was proceeding in the court of appeals and in this Court, the district court turned to the government's pending motion for reconsideration relating to the use of hypothetical community rates. On December 21, 1984, the district court granted the government's motion. The court explained that, under Laffey v. Northwest Airlines, supra, fees generally should be based on an attorney's actual billing rates, rather than on a hypothetical prevailing rate. The district court accordingly recalculated the lodestar on the basis of the actual rates charged by respondents' attorneys: $80 per hour for partners and $65 per hour for associates (which substituted for the court's original fee schedule of $75 per hour for the most junior associates and $150 per hour for the most senior partner (App., infra, 15a, 29a)). Id. at 11a. In making this calculation, however, the district court again used actual current rates, rather than the rates in effect at the time that the work at issue was performed. While this adjustment resulted in a substantial reduction in the size of the lodestar, the district court proceeded to readjust the new lodestar upward by 54.75% -- representing $99,546.53 -- "(i)n view of (respondents' attorneys') superior services and exceptional success" (App., infra, 12a). In doing so, the court explained that the services provided by the attorneys "were far superior to what could reasonably be expected of attorneys charging a maximum of $65 per hour for associates and $80 per hour for partners" (ibid.). The court also reaffirmed its September 17, 1984, conclusion (see id. at 36a-44a) that the attorneys were entitled to a 20% "contingency adjustment" amounting to $36,364.03 (id. at 14a). The court accordingly ordered the government to pay respondents' attorneys an additional $147,807.25 (id. at 15a). On the government's appeal, the court of appeals again affirmed by order. The court "question(ed) whether the 'enhancements' made for quality and contingency fit the case law as it is evolving," but explained that its "doubts on that score are offset by appreciation that, in this particular case, * * * (the attorneys') own rate(s) may have fallen below the rate brackets indicated by the charges of other firms for similiar work in this community." The court of appeals accordingly found "no abuse of discretion in the fees and expenses awarded in the order on review." App., infra, 2a. /4/ REASONS FOR GRANTING THE PETITION 1. The district court's use of the rates currently charged by respondents' attorneys in its calculation of the fee award here cannot be reconciled with this Court's recent decision in Library of Congress v. Shaw, No. 85-54 (July 1, 1986). In Shaw, the Court reaffirmed the traditional rule that the United States is immune from liability for interest "(i)n the absence of express congressional consent to the award of interest separate from a general waiver of immunity to suit" (slip op. 4). The Court added that this traditional "no-interest rule" should be applied "to prevent parties from holding the United States liable on claims grounded on the belated receipt of funds, even when characterized as compensation for delay" (id. at 11). And the Court rejected the contention -- relied upon by the courts below (see App., infra, 35a n.5) -- that 42 U.S.C. 2000e-5(k) effected a waiver of this governmental immunity (slip op. 7-11). Because the courts below viewed the use of current rates as the equivalent of "an adjustment for 'delay in payment'" (App., infra, 35a n.5), the judgment of the court of appeals should be vacated, and the case remanded to give those courts an opportunity to recalculate the fee award in accordance with the standards set out in Shaw. /5/ 2. We also note that the district court's enhancement of the fee award to reflect the superior quality of the representation provided by respondents' counsel appears inconsistent with this Court's decision in Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, No. 85-5 (July 2, 1986). While acknowledging that enhancement of the lodestar might be appropriate in extraordinary cases, the Court in Delaware Valley emphasized that "the 'quality of representation( )' and the 'results obtained' from the litigation are presumably fully reflected in the lodestar amount, and thus cannot serve as independent bases for increasing the basic fee award" (slip op. 17 (quoting Blum v. Stenson, 465 U.S. 886, 898-900 (1984)). For this reason, the Court explained that "the overall quality of performance ordinarily should not be used to adjust the lodestar, thus removing any danger of 'double counting'" (slip op. 19). These observations seem fully applicable here. Because the rate used in calculating the lodestar in this case is the one actually charged by respondents' attorneys in litigation involving paying clients, it is hardly obvious "why the lodestar amount was unreasonable" (Delaware Valley, slip op. 20). And the compensation of respondents' attorneys at their normal billing rates -- the rates at which those attorneys make themselves available to the public -- plainly satisfies the purpose of Section 2000e-5(k) by making "it possible (for a Title VII plaintiff) to engage a lawyer based on the statutory assurance that he will be paid a 'reasonable fee'" (slip op. 18). It therefore would be appropriate to direct the court of appeals to reconsider the use of a quality-of-representation multiplier in light of the guidance provided by Delaware Valley. 3. Finally, the remaining element of the lodestar enhancement here -- the 20% contingency multiplier -- involves an issue that currently is before the Court. The Court has set a portion of Delaware Valley for reargument next year to address the question whether attorneys' fees awarded under fee-shifting statutes "may be enhanced based on the risk of loss, and if so, to what extent" (Delaware Valley, slip op. 21). The Court therefore might wish to hold this case pending final disposition of Delaware Valley. In our view, however, judicial economy would best be served by remanding this case to the court of appeals now; the court of appeals could itself withhold final judgment pending this Court's decision in Delaware Valley. In the interim, that court would have had an opportunity to assess the significance of Shaw and the already-decided portions of Delaware Valley for the outcome here. /6/ CONCLUSION The petition for a writ of certiorari should be granted, the judgment of the court of appeals vacated, and the case remanded for reconsideration in light of Shaw v. Library of Congress, No. 85-54 (July 1, 1986), and Pennsylvania v. Delaware Valley Citizens Council for Clean Air, No. 85-5 (July 2, 1986). Respectfully submitted. CHARLES FRIED Solicitor General JULY 1986 /1/ That is, the attorneys would be compensated for each hour billed during the course of the litigation at current rates, rather than at the rate actually charged by the attorneys at the time that the given hour of work was performed (see App., infra. 34a). /2/ The government also challenged the "prevailing market rate" proposed by respondents and certain claims for expenses (see App., infra, 28a), issues that are not in controversy here. /3/ The court of appeals also affirmed the district court's first interim order directing immediate payment of the uncontested portion of the fees (App., infra, 19a). That portion of the fees has now been paid. /4/ While recognizing that the use of current rates in the calculation of a fee award was proper under District of Columbia Circuit precedent, the government did not "waive any argument concerning the District Court's utilization of (respondents') counsel's current billing rates, as opposed to the rates in effect when the work was actually performed, a situation raising the issue of the payment of interest which is currently involved in the Government's pending petitions for writs of certiorari in Shultz v. Palmer, No. 85-50 (July 11, 1985), and Library of Congress v. Shaw, No. 85-54 (July 12, 1986)." Gov't C.A. Reply Br. 10 n.5 (emphasis in original); see Gov't C.A. Br. 5 n.1. /5/ As noted above (at 4-5), that is the course followed by the Court in an earlier stage of this litigation involving the award of attorneys' fees at current rates. See Shultz v. Palmer, No. 85-50 (July 7, 1986) (memorandum). /6/ We note that withholding a final disposition here pending the outcome in Delaware Valley would not delay payment in an inequitable manner. Respondents' attorneys already have received $219,439.40 in fees pursuant to the district court's first interim order. The entitlement of the attorneys to any of the remaining fees is in dispute. APPENDIX